Thirty years ago, Chile was a basket case. A socialist government in
the 1970s had crippled the economy and destabilized society, leading to
civil unrest and a military coup. Given the dismal situation, it’s no
surprise that Chile’s economy was moribund and other Latin American
countries, such as Mexico, Venezuela, and Argentina, had about twice as
much per-capita economic output.
Today, by contrast, Chile has passed Argentina to become the richest nation in all of Latin America. For three decades, it has been the fastest-growing economy in the region. Poverty has fallen dramatically, and living standards have soared.
Let’s look at how Chile became the Latin Tiger.
Pension reform is the best-known economic reform in Chile. Ever since the early 1980s, workers have been allowed to put 10 percent of their income into a personal retirement account. This system, implemented by José Piñera, has been remarkably successful, reducing the burden of taxes and spending and increasing saving and investment, while also producing a 50-100 percent increase in retirement benefits. Chile is now a nation of capitalists.
But it takes a lot more than entitlement reform, however impressive, to turn a nation into an economic success story. What made Chile special was across-the-board economic liberalization. This chart, based on the five key variables in the Fraser Institute’s Economic Freedom of the World (EFW) report, shows how Chile moved in the right direction over time.
Today, by contrast, Chile has passed Argentina to become the richest nation in all of Latin America. For three decades, it has been the fastest-growing economy in the region. Poverty has fallen dramatically, and living standards have soared.
Let’s look at how Chile became the Latin Tiger.
Pension reform is the best-known economic reform in Chile. Ever since the early 1980s, workers have been allowed to put 10 percent of their income into a personal retirement account. This system, implemented by José Piñera, has been remarkably successful, reducing the burden of taxes and spending and increasing saving and investment, while also producing a 50-100 percent increase in retirement benefits. Chile is now a nation of capitalists.
But it takes a lot more than entitlement reform, however impressive, to turn a nation into an economic success story. What made Chile special was across-the-board economic liberalization. This chart, based on the five key variables in the Fraser Institute’s Economic Freedom of the World (EFW) report, shows how Chile moved in the right direction over time.
No comments:
Post a Comment